{"id":121864,"date":"2025-12-18T17:33:30","date_gmt":"2025-12-18T13:33:30","guid":{"rendered":"https:\/\/noortrends.ae\/en\/?p=121864"},"modified":"2025-12-18T17:33:33","modified_gmt":"2025-12-18T13:33:33","slug":"ecb-holds-at-2-as-inflation-near-target-but-services-keep-policymakers-cautious","status":"publish","type":"post","link":"https:\/\/noortrends.ae\/en\/ecb-holds-at-2-as-inflation-near-target-but-services-keep-policymakers-cautious\/12\/18\/market-updates\/","title":{"rendered":"ECB Holds at 2% as Inflation Near Target, but Services Keep Policymakers Cautious"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\"><\/h2>\n\n\n\n<p>The <strong>European Central Bank (ECB)<\/strong> left interest rates unchanged on Thursday, keeping the <strong>deposit rate at 2%<\/strong>, in a decision that was broadly expected as inflation trends stay close to the bank\u2019s target and policymakers avoid locking themselves into a fixed easing path.<\/p>\n\n\n\n<p>The ECB previously cut rates in <strong>June<\/strong>, lowering the deposit rate to <strong>2% from 4%<\/strong> within a year, but has since <strong>paused<\/strong> further cuts. In its statement, the central bank reiterated that it is <strong>\u201cnot pre-committing to a particular rate path,\u201d<\/strong> reinforcing a meeting-by-meeting approach guided by incoming data.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Updated inflation path: near target overall, but \u201csticky\u201d services linger<\/h3>\n\n\n\n<p>New <strong>Eurosystem staff projections<\/strong> show inflation settling close to the ECB\u2019s 2% medium-term objective:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Headline inflation:<\/strong> <strong>2.1% (2025)<\/strong>, <strong>1.9% (2026)<\/strong>, <strong>1.8% (2027)<\/strong>, <strong>2.0% (2028)<\/strong><\/li>\n\n\n\n<li><strong>Core inflation (ex-energy &amp; food):<\/strong> <strong>2.4% (2025)<\/strong>, <strong>2.2% (2026)<\/strong>, <strong>1.9% (2027)<\/strong>, <strong>2.0% (2028)<\/strong><\/li>\n<\/ul>\n\n\n\n<p>The ECB highlighted that <strong>inflation was revised up for 2026<\/strong>, largely because <strong>services inflation is expected to decline more slowly<\/strong> than previously assumed\u2014an important detail because services prices are often tied to wage dynamics and domestic demand, making them harder to cool quickly.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Growth outlook upgraded: domestic demand doing more of the heavy lifting<\/h3>\n\n\n\n<p>The ECB also upgraded its growth forecasts versus September, pointing to firmer domestic demand:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>GDP growth:<\/strong> <strong>1.4% (2025)<\/strong>, <strong>1.2% (2026)<\/strong>, <strong>1.4% (2027)<\/strong>, <strong>1.4% (2028)<\/strong><\/li>\n<\/ul>\n\n\n\n<p>This matters because stronger internal demand can support growth\u2014but it can also make the ECB more cautious about cutting too quickly if it risks keeping services inflation elevated.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Market reaction: euro steadies after earlier dip<\/h3>\n\n\n\n<p>Following the decision, the <strong>euro rebounded<\/strong>, turning <strong>flat on the day<\/strong> against the dollar after earlier weakness, trading around <strong>1.1735<\/strong>. The move suggests markets interpreted the ECB as <strong>neutral-to-cautious<\/strong>: inflation is close enough to target to stay on hold, but the bank is not signaling urgency to restart cuts while services inflation remains sticky.<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The European Central Bank (ECB) left interest rates unchanged on Thursday, keeping the deposit rate at 2%, in a decision that was broadly expected as inflation trends stay close to the bank\u2019s target and policymakers avoid locking themselves into a fixed easing path. The ECB previously cut rates in June, lowering the deposit rate to &hellip;<\/p>\n","protected":false},"author":9,"featured_media":103847,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[37,39,36],"tags":[],"class_list":["post-121864","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-forex-markets","category-global-stock-markets","category-market-updates"],"_links":{"self":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/121864","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/comments?post=121864"}],"version-history":[{"count":1,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/121864\/revisions"}],"predecessor-version":[{"id":121865,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/121864\/revisions\/121865"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/media\/103847"}],"wp:attachment":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/media?parent=121864"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/categories?post=121864"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/tags?post=121864"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}